You know what? That 86 year old Wall Street brokerage might actually have been put out of business or sold or whatever by people spreading false rumours. Apparently, they bought things that are known as out-of-the-money put options which allowed them to just pay a few cents for the right (but not the obligation) to sell shares in Bear Stearns at a level way below the prevailing share price. And then they put so many stories around the market about Bear going bust that everyone took their money out and the share price DID collapse. Apparently, it’s know as a bear raid, hehe. It could turn out that these were the same people who took out put options in airline stocks before the Twin Towers got hit. The SEC is looking into it. They should hang the bloody lot of them.
SEC spokesman John Nester and NYSE spokesman Scott Peterson declined to comment. Bear Stearns spokesman Russell Sherman didn’t return a phone call seeking comment. The SEC is seeking to question traders who profited from options or short sales, one of the people familiar with the probe said.
The case underscores regulators’ concern that malicious rumors have the potential to fuel market panic and exacerbate shareholder losses on financial stocks. Bear Stearns had more than $17 billion in cash and salable assets on March 11 when lenders and customers began removing funds, the SEC said in a March 14 statement.
Related links:
Interfluidity - Bair raid in plain sight?
Alea - on Bear and the SEC
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